TRENTON ‐ After a two-and-a-half-month stalemate, Assembly Speaker Vincent Prieto (D-Hudson) and Gov. Chris Christie have reached “common ground” on renewing a crucial law that mayors say has taken a significant bite out of property tax growth…
When Gov. Christie came to office in 2010, he took action to address the biggest problem New Jerseyans have faced for decades – property taxes. Working with the Legislature, historic tax reforms were signed into law. These included a two percent limit on property tax levies, increased health and pension contributions by public employees and a two percent cap on awards arbitrators can grant when towns and their unions can’t agree on a contract.
These cost control tools are working. Recent property tax data shows the average property tax bill grew by 1.7 percent in 2013 and by the lowest consistent rate in decades since the reforms were passed. While our ultimate goal is to actually cut property taxes, slowing their growth is an essential first step.
The clock is now counting down to the destruction of the delicate framework that has successfully controlled our property taxes. An essential component of that framework – the arbitration award cap which enables local officials to control their largest costs – expired on April 1 of this year. The first contracts exempt from the cap will expire in June. That will be a disaster for property taxpayers throughout New Jersey. Without an honest and effective arbitration award cap, the property tax cap will fail.
The state’s interest arbitration cap law is one of the primary reasons we have turned the tide on the escalation of property taxes. According to the Public Employment Relations Commission, from January 2011 (when the arbitration law took effect) to September 2013, average raises in local contracts, whether through arbitration or negotiations, were 1.86 percent — the lowest in at least 20 years.
Both the State Senate and General Assembly passed the bill that would blow a hole in municipal budgets for the next four years, the “extension” of the 2% Interest Arbitration Cap for police and firefighters base salaries that did not really cap those salaries. Had the bill become law, there would have been a massive cut in municipal services throughout New Jersey or property taxes would have started rising again at levels we experienced during the Corzine/Codey/McGreevey administrations.
But Governor Chris Christie conditionally vetoed the bill and the Senate quickly concurred with the changes he made to the bill which kept the cap intact through December 2017 by a vote of 33-1. Christie’s office announced the conditional veto and the Senate’s concurrence in the same press release.
One has to wonder why the Senate went through the exercise of passing the “bad bill” in the first place, by a vote of 28-7, only to abandon the changes it made to the existing Interest Arbitration Cap and, for the most part, extend the existing law for another four years, so quickly. Without the Senate’s concurrence to Christie’s conditional veto, the cap on arbitration awards would expire on April 1st. Either the “bad bill” or the expiration of the cap would have been a victory for the Trenton Democrats benefactors in the police and firefighters unions.
The unions may still have their victory. Before the Assembly could take a vote on concurring with Christie’s conditional veto, Speaker Vincent Prieto abruptly adjourned the session. No Assembly session has been scheduled, yet, to take up the concurrence prior to April 1.
Below is a video of Assemblyman Declan O’Scanlon’s floor speak before the chamber voted on the “bad bill.” As usual, O’Scanlon makes is case and fights for New Jersey taxpayers very well.
Legislature in poised to pass a “cap” that doesn’t control costs
State Senator Mike Doherty
State Senator Mike Doherty (R-Warren) told MMM that he hadn’t read a bill of which is he is a primary sponsor, the day after it cleared the Senate State Government, Wagering, Tourism and Historic Preservation Committee.
We’re not talking about an insignificant bill like designating “I’m from New Jersey” as the State Song, or the establishment of special licenseplates for honorably discharged veterans, two other bills that Doherty sponsored.
We’re talking about the extension of the 2% cap on arbitration awards for police and firefighters unions, the provision of the 2010 reform legislation that slowed the growth in New Jersey’s property taxes and made the 2% cap on those taxes work.
Doherty joined Senate President Sweeney in sponsoring legislation that exempts contracts that have already been subject to the cap from being subject to it again when they are up for renewal and raises the cap to 3% on contracts that have not yet been subject to renegotiation.
Doherty said, “I don’t see what the big deal is, the original bill had one bite at the apple, this bill extends that. Is it a perfect bill? No, but this is the way Trenton works. A bill that passes is better than no bill.”
Not really, Senator. A bill that passes the same as no bill, except it deceives the public into thinking the legislature is continuing fiscal reforms when they are actually engineering massive chaos in municipal governments.
Doherty said he hadn’t read the bill when we questioned him on specifics. He said he was relying on analysis of the bill from Republican legislative staffers and referred questions to Republican Senators Steven Oroho and Sam Thompson, members of the committee that unanimously cleared the bill.
The leadership of the police and firefighters unions not only read the bill, they helped write it, according to what they are telling their members.
TRENTON — A fight over renewing a law crucial to holding back an increase in property taxes is nowhere near resolved, a Republican lawmaker who has led the fight for retaining it said today. Although the Democrat-led Legislature last week began advancing…
It’s beginning to look like Governor Chris Christie’s Boulevard of Compromise is a dead end.
The 2% property tax cap is under attack, as the Trenton Democrats are on the verge of passing an “extension” of the Interest Arbitration Award Cap that eliminates the cap on most arbitration awards and increases the cap on the remainder of the potential awards by 50%.
In my piece last night about the Interest Arbitration Cap, I raised the hope that published reports that Assembly and Senate committees cleared an identical bill that guts the cap were inaccurate because Senator Mike Doherty was co-sponsor of the Senate bill and because of Senate President Steve Sweeney’s comments about the cap at his Town Hall Meeting in Keansburg last week. It turns out that was wishful thinking. MMM has learned the bills are identical and, inexplicably, Doherty is a primary sponsor of the Senate bill, giving Sweeney and Assembly Speaker Vincent Prieto “bi-partisan” cover.
Doherty has yet to return our call for comment. We’ve been told his attitude about the bill he is sponsoring with Sweeney is “a bill that will pass is better than no bill.”
Doherty has a point, albeit a minor one. If no bill passes by April 1, there is no cap on Interest Arbitration awards at all. If the bill that cleared through committees yesterday passes the full legislature and is signed by Christie, there will be a 3% cap on a minority of municipal government labor contracts for the next few years. If Christie vetoes the bill, even conditionally, there is no arbitration cap. Either way the property tax blaze is about to be reignited and/or the pain inflicted upon municipalities will be so great that consolidations and mergers will be forced indelicately. The backdoor destruction of municipal governments appears to be Sweeney’s undeclared plan.
New Jersey property taxes will likely resume the double digit annual growth that occurred under the McGreevey, Codey and Corzine Administrations if Assembly Speaker Vincent Prieto’s version of the of the Interest Arbitration extension becomes law. Either that, or municipal governments as we know them will cease to exist, succumbing to a long and painful death of higher crime and reduced services and capital improvements.
A 2% cap on interest arbitration awards in labor disputes was a key component of the 2% property tax cap negotiated between Governor Chris Christie, Senate President Steve Sweeney and Prieto’s predecessor, Sheila Oliver in 2010. It worked. Arbitrators made awards of less that 2% to police and fire fighters unions and property taxes rose less than 2% per year over the last four years.
The problem is Oliver insisted that the arbitration cap expire on April 1, 2014. Now, we’re a week before the arbitration cap expires and Prietro is gutting the cap by passing an extension of the law that exempts contracts that were awarded less than 2% during the last three years from any future caps and raises the cap to 3% on contracts that have not been negotiated since 2010.
The math will never work. If property taxes stay capped at 2% but the primary cost of property taxes, salaries, are not capped or are capped at 3%, municipal services will disappear. Police will be laid off, with the junior, lower paid officers being let go first, leaving the older and more highly paid officers to run drown the inevitable increase in crime. Towns will go bust. The state will take over municipal governments and force consolidations.